ROPE is a full-scale decentralized ecosystem built on top of the high-performance Proof of History technology implemented by the Solana network. Drawn out transaction processing and steadily rising gas fees on other networks in the world of digital assets have created room for a newer and more robust blockchain to build upon. These platforms have pioneered the industry and allowed for decentralized finance applications to fall into the attention of the mainstream, but in order to revolutionize the world of DeFi we need to work within a framework that is not only scalable and secure but also inexpensive and accessible to all for processing numbers of transactions that are orders of magnitude greater than what any other network can handle in the current market environment.
Proof of History (PoH) is a concept that allows for validators and individuals alike to prove that a message has occurred before or after a specific event. PoH operates through sequential functions; these sequential steps coincide with a concept known as a “Verifiable Delay Function,” which are vital components of this process and produce timestamps for transactions that can be easily verified. As Solana states on their website: PoH is a “clock before consensus.” For the purpose of this article, we won’t go into details on the technicalities of this protocol (see a detailed explanation here). The network is currently able to handle over 50,000 transactions per second with near-zero latency, and has a theoretical maximum of over 700,000 transactions per second — costing an average of $0.001 per transaction. This technology has solved the problem of scalability, so the infrastructure is here for streamlining the next stage of DeFi.
The ROPE Ecosystem
ROPE and ROPEV tokens comprise the ecosystem, where ROPE is the governance token and ROPEV is a volatility token with its value tracked through a volatility index. ROPE is hard capped at a 10 million token supply. The token distribution was completed on April 4, 2021 as an airdrop to thousands of people from all over the world. This left the remaining 5 million tokens to be allocated to marketing/promotions (1 million), development (1 million), and liquidity/staking (3 million).
A few minor adjustments had to be made to our original figures due to recent changes in the team (as outlined in a previous post). ROPE can be staked in liquidity pools available on Raydium Protocol and Orca Platform. As liquidity increases in the pools, the value of the ROPE token is set to increase as well. This will incentivize a highly liquid pool and stability in demand, particularly due to the static supply.
The Volatility Index
The ROPEV index will be paralleled to the VIX of the equities markets, although it will strictly track volatility of digital assets through cryptocurrency options prices via integrated oracles. As of now, Bitcoin and Ethereum are the only assets in the market that have options chains we can pull data from — as more options chains become available, more assets can be added to the index and weighted by market capitalization.
ROPE will be used to govern the ROPEV index by allowing holders to vote on assets to be included in it. More details regarding this governance voting system will be provided at a later date. ROPE will also be required as collateral to trade the index on our front-end GUI, ROPEx, which will be hosted on our website. This interface will allow traders to mint ROPEV tokens by collateralizing their ROPE, which will be held in a smart contract tied to the time-stamped ROPEV tokens (note: there will be no initial supply of ROPEV, as this figure will be directly correlated to the collateralized ROPE through ROPEx). These tokens will have a funding and minting fee structure (paid in ROPE) that will be accumulated and locked in the ROPEx pool. The framework of funding will not only be used to maintain liquidity, but also as a dynamic tool to safeguard the integrity of the index. Once this liquidity pool reaches a certain threshold, it will be distributed to ROPE stakers and/or used for emergency funding for any liquidity requirements.
The ROPEx Graphical User Interface
It is important to address how ROPEx is able to hold and pay out ROPE as profit for winning trades and how losses will be processed. The ROPEx pool will initially contain tokens acquired from the liquidity allocation (set to be 1 million ROPE). Users will be able to navigate to the ROPEx web application to exchange their ROPE for ROPEV or vice versa. Users can also directly interact with the smart contract without the need for any GUI. The exchange rate of the ROPE/ROPEV pair will be determined by the value of the ROPEV index at the time of the transaction. As mentioned, the transactions of ROPEx will be fully managed by a smart contract. If a user returns their ROPEV tokens for a value less than they originally minted at, the smart contract returns the equivalent value of ROPE and keeps the remainder of the collateral. On the other hand, if a user returns their ROPEV tokens for a value greater than they originally minted at, the collateral is returned plus any profit earned. Minting fees are paid at the time ROPEV is transferred to the user’s wallet, and the burning and funding fees are automatically paid at the time collateral is returned.
ROPEV tokens do not expire, nor is there any time limit for how long you may keep your collateralized ROPE locked in the ROPEx pool. Specifications on funding fees will be announced at a later date, along with the calculations of the index valuation.
Based on recent events in the cryptocurrency markets, it is evident that a decentralized tool for trading volatility-based assets would be of great utility to the global community of day traders. The ROPE ecosystem will deliver this with speed, accessibility, and scalability.
DeFi is revolutionizing the world of finance, and ROPE will be at the forefront with the Solana network as we segue into more scalable solutions for the future.
